Hunting Regulatory News (HTG)

Hunting PLC

("Hunting" or "the Company" or "the Group")

Interim Results for the six months to 30 June 2013

Hunting PLC (LSE:HTG), the international energy services group, today announces its interim results for the six months to 30 June 2013.

Financial Highlights - from continuing operations

Operational Summary

· Positive business performance reported across many Group operations including:

o strong results from Premium Connections and US Manufacturing driven by global offshore activity and North American oil shales;

o improving operating environment for Drilling Tools, with market share captured in key oil focused shale basins;

o good results from Hunting Titan with new sales strategies and increasing geographic footprint;

o strengthening demand for Hunting Subsea products.

· Continued investment in manufacturing footprint:

o purchase of 40 acre site in Houston, Texas is nearing completion, to provide additional premium threading capacity and accommodate a facility to develop, test and certify new premium connection thread designs - projected capital investment of US$54m;

o due diligence nearing completion to purchase a 9 acre site in Cape Town, South Africa, to provide sub-Sahara manufacturing and repair capabilities - projected capital investment of US$20m;

o commencement of US$36m phase two expansion at Houma, Louisiana to service offshore activity;

o Capital investment in the period of £20.1m (H1 2012: £37.2m);

o Number of employees 3,952 (31 December 2012: 3,866).

· Low rig activity levels in Canada and excess inventories held by customers of the Hunting Electronics and US Pipe businesses have adversely impacted underlying profit from operations in H1 2013 compared to H1 2012 by £7.1m. Rig activity levels have since improved and demand for our products and services has strengthened.

 Commenting on the results Dennis Proctor, Chief Executive, said:

"Hunting reports today underlying results broadly in line with the Group's financial performance in the second half of 2012. We are pleased that momentum has been maintained throughout the first six months, with improving order book and activity levels reported in the majority of our businesses. Our confidence in the longer term outlook for the industry underpins the programme of capital investment to further expand the Group's manufacturing capacity."

Hunting PLC will host an Analyst and Investor briefing on Thursday 29 August 2013 at 10.30am at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN.

An audio webcast will be available on:

http://mediaserve.buchanan.uk.com/2013/hunting290813/registration.asp

For further information please contact:

Notes to Editors:

About Hunting PLC

Hunting PLC is an international energy services provider to the world's leading upstream oil and gas companies. Established in 1874, it is a fully listed public company traded on the London Stock Exchange. The Company maintains a corporate office in Houston and is headquartered in London. As well as the United Kingdom, the Company has principal operations in Canada, China, Hong Kong, Indonesia, Mexico, Netherlands, South Africa, Singapore, Thailand, United Arab Emirates and the United States of America.

Half Year Management Report

Hunting PLC ("the Group"), the international energy services company, announces its results for the six months ended 30 June 2013.

Introduction

The first six months of 2013 have delivered underlying trading results broadly in line with H2 2012. While global rig counts and commodity prices have remained generally flat since the start of 2013, the performance of the majority of Hunting's businesses improved in the period, with most units reporting a positive outlook as we reach the halfway point of the year.

Within North America, onshore gas-focused drilling has remained subdued because of commodity pricing remaining low from oversupply, however, this has been offset by continued oil-focused investment particularly in the North Dakota shale basins of Bakken and Williston and accelerating activity levels offshore Gulf of Mexico. In Canada, activity levels have reduced due to the lower active rig counts reported year on year. In Europe, while the number of active rigs has decreased in the North Sea, business opportunities remain positive, driven by new industry investment planned in the region. In the Middle East and Asia-Pacific, the Group's activity levels have benefited from the increased geographic reach of Hunting's product offering.

In parallel to this improving operating environment, Hunting continues to implement its strategy for long term growth, with continued capital investment in the Group's global facilities. New facilities planned in North America and South Africa will enable the Group to maintain its position as a leading provider of Oil Country Tubular Goods ("OCTG") products and tools for use in both onshore and offshore activities, with plans to develop an in-house testing capability to accelerate the product approval process. Our green field investment in South Africa is targeted to be operational by late 2014, with a manufacturing facility planned for Cape Town on a nine acre site to service drilling activity, primarily offshore East Africa, with two regional service / repair facilities planned for Mozambique and Tanzania. Capital investment in South Africa is projected to be US$20m.

In May 2013, Hunting Titan broadened its distribution network in Western Canada with the purchase of additional manufacturing and distribution facilities. With this transaction Hunting Titan can now sell its range of products, which in time will be broadened to include Hunting's complete portfolio of products.

The operational scale of Hunting continues to grow and at 30 June 2013 comprised 74 manufacturing, service and distribution facilities with a footprint of 2.8m square feet (31 December 2012 - 66 facilities; 2.7m square feet).

The new facilities in North America and South Africa will add in excess of 0.3m square feet to the facilities footprint once commissioned.

Financial Summary

The summary results for the Group from continuing operations are presented below:

* Underlying - results for the year, as reported under IFRS, adjusted for amortisation and exceptional items. Reported - results for the year

under IFRS.

**H1 2012 has been restated following the adoption of IAS 19 (revised) on 1 January 2013.

Revenue

Revenue from continuing operations for the six months ended 30 June 2013 increased to £424.4m(2012 - £406.9m) due to steady activity levels with momentum improving across the reporting period.

EBITDA and Profit

Underlying EBITDA was £75.6m, against £77.7m in 2012. Underlying EBITDA margin was 18% down from 19% in 2012, with the decline attributed to product mix, including lower margin OCTG revenues during the period.

Underlying profit from continuing operations was £61.2m (2012 - £64.7m), with reported profit from continuing operations £40.8m (2012 - £40.3m). Underlying profit before tax from continuing operations was £59.3m (2012 - £61.6m) and reported profit before tax from continuing operations was £38.9m (2012 - £37.2m). Net finance expense was £2.1m (2012 - £3.5m).

Discontinued Operations

The income statement benefits from the partial resolution of a legacy Gibson Energy tax dispute in Canada during the period. The £8.1m credit includes a £7.6m release of provision and £0.6m refund of tax payments from the Canadian tax authorities.

Taxation

The underlying tax charge on continuing operations was £17.2m (2012 - £17.8m) and reflects an effective tax rate of 29% (30 June 2012 - 29%; 31 December 2012 - 28%). The rate has increased by 1% from the year end, reflecting the mix of profits arising in the tax jurisdictions across our countries of operation. The exceptional charge in the period attracts a tax credit of £7.1m (2012 - £9.4m), to give a net tax charge on continuing operations of £10.1m (2012 - £8.4m).

Amortisation and Exceptional Items

The charge for intangible asset amortisation was £14.0m compared to £14.4m in 2012.

The following exceptional items, totalling £6.4m, arose in the first half of 2013:

· Fair value uplift to inventories charge - £2.1m (2012 - £6.1m)

· Impairment of oil and gas reserves and dry hole costs - £2.4m (2012 - £2.7m)

· Settlement of litigation and associated legal expenses - £1.9m (2012 - £nil)

Exchange Rates

Average exchange rates used to translate US dollar and Canadian dollar denominated results into UK sterling were US$1.54 (2012 - US$1.58) and Can$1.57 (2012 -Can$1.59). Spot exchange rates for the US dollar and Canadian dollar at 30 June 2013 were US$1.52 and Can$1.60, at 30 June 2012 were US$1.57 and Can$1.60 and at 31 December 2012 were US$1.63 and Can$1.62 respectively.

Capital Investment

Capital investment was £20.1min the period (2012 - £37.2m), of which £12.8m (2012 -£12.2m) was replacement spend and £7.3m (2012 -£25.0m) was new business investment. The main components within new business investment include £1.5m on new drilling tools and £2.2m on facility expansion programmes across the Group. Replacement spend includes £1.6m (2012 -£2.8m) by our Exploration and Production unit on contractually committed projects.

Balance Sheet

Net assets reported at £881.5m were £61.5m higher than year end (31 December 2012 -£820.0m). The net movement comprises the £36.9m retained profit for the period together with foreign exchange gains of £45.2m, offset by £20.2m of dividends declared and other items of £0.4m.

Cash Flow

Net debt at 30 June 2013 was £158.8m (30 June 2012 - £191.4m) compared to net debt at 31 December 2012 of £163.8m, reflecting a net cash inflow of £5.0m in the first half of 2013 (note 12).

With reported EBITDA of £71.1m (2012 - £70.4m) in the six months to 30 June 2013, the principal cash flows in the period include an increase in working capital of £30.7m (2012 -£6.7m decrease), capital investment of £20.1m (2012 - £37.2m) and tax payments of £3.4m (2012 - £13.3m). The acquisition of XL Perforating Partnership ("XLPP") during the period absorbed £5.8m and a deferred consideration payment of £1.3m was made in respect of the acquisition of Specialty in 2011. Tax indemnity refunds relating to former subsidiary Gibson Energy provided £9.4m of income.

Dividend

The Board is declaring an interim dividend of 4.75p (2012 -4.50p) per share. The dividend will be paid on 26 November 2013 to shareholders on the register at the close of business on 8 November 2013, with an ex-dividend date of 6 November 2013. Dividend cover from continuing operations after amortisation and exceptional items is 3.9 times (30 June 2012 - 4.1 times).

Operational Review

Hunting's segmental results are presented below:

Underlying profit from continuing operations

Hunting Energy Services

Well Construction

Hunting's Premium Connections business unit reported strong demand throughout the first half of 2013 from activity levels in the oil-focused shale basins. Activity in the Gulf of Mexico and international waters continued to strengthen during the period, offsetting the subdued activity in the onshore gas shale basins. During the period, a number of investment initiatives were approved, which will provide additional capacity for growth in both North America and internationally. In June 2013, the Group approved construction of a new US$43m facility in Houston, Texas to increase the Group's threading capacity in the region. The site will also include an US$11m premium connections testing facility which will enable the Group to accelerate the approval process on new connection product lines.

The Drilling Tools platform started the year slowly, however, activity levels improved during the period as continued investment in the oil-focused shale basins increased demand for the Group's mud motor fleet. The business has increased its market share in the Williston and Bakken regions, as the industry continues to develop oil shale basins. The business is looking to increase the size of its mud motor fleet throughout the remainder of the year to service the anticipated increase in activity levels within these regions.

In Canada, trading results suffered due to adverse weather conditions and a continuing weak natural gas market, which led to depressed drilling activity levels. The aggregate adverse variance from our Canadian Pipe and Manufacturing activities on underlying profit from operations in H1 2013 compared to H1 2012 was £2.7m.

Within the Advanced Manufacturing Group ("AMG"), results from Hunting Electronics were adversely impacted by excess customer inventory levels, giving rise to a H1 2013 to H1 2012 adverse variance of £3.3m on underlying profit from operations. At Hunting Dearborn, activity levels have been high throughout the period and the order book now extends to the end of the year. Efforts to market the AMG brand continue, particularly internationally, with a sales presence now established in Singapore. Customer interest continues to grow for the combined AMG product offering.

Well Completion

Hunting Titan has reported a strong performance in the first half of 2013, driven by demand for its Perforating and Energetics product lines, partially being offset by more subdued trading from its Instrumentation division. The business introduced a tiered pricing strategy for a number of its products, which had a positive impact on revenues. Hunting Titan continues to benefit from the implementation of lean manufacturing practices throughout its facilities. An additional distribution centre was opened in Jakarta, Indonesia during Q2 2013 to serve the Asia Pacific region. In May 2013, the business acquired its Western Canada distributor, XLPP, which adds six new distribution facilities and one manufacturing facility. Manufacturing of Hunting Titan products continues in Canada and manufacturing capability for certain products has now been established at our China facility.

Hunting's US Manufacturing business unit continued to report strong demand during the first half of 2013, as customer requirements for premium threading and wireline products increased. In July 2013, the Board approved the second phase of investment at the Group's Houma, Louisiana facility to service the accelerating activity in the Gulf of Mexico. The US$36m expansion will also allow for further consolidation of sites in the region and on completion will add over 0.2m square feet of manufacturing capacity.

Results from our Asia Pacific operations continued to strengthen during the period, reflecting healthy levels of activity within the region.

Well Intervention

Hunting Subsea has reported an increase in activity throughout the reporting period as sales of valves and couplings increased. A strengthened sales force is now in place, to target the European subsea market. The business has also launched a number of new product lines in the period, which has attracted customer interest.

Hunting's Thru-Tubing activities continue to gain interest in North America, with a manufacturing base now established at Hunting's Conroe, Texas facility and new sales initiatives under way in Canada.

Other Operating Businesses

Exploration and Production

Hunting's Exploration and Production division has oil and natural gas investments in the Southern US and shallow water offshore Gulf of Mexico, holding equity interests in over 50 production properties. On a Net Equivalent Barrel ("NEB") basis, production in the first half of the year was 81,000 NEB (2012 - 69,000 NEB), with proven reserves at 30 June 2013 being 1.1m NEB (2012 - 1.1m NEB). Revenue for the period totalled £2.8m (2012 - £2.6m) with an underlying profit from operations of £0.3m (2012 - £0.1m).

During the reporting period the business participated in drilling three oil and gas wells; a successful exploration well in shallow waters offshore Louisiana and two successful onshore development wells in south Texas. The two onshore wells are now producing and the offshore well should commence production in November 2013. The Group's strategy remains only to participate in wells where the division has a contractual commitment to participate.

Following the mid-year valuation of reserves, the business has taken an impairment charge of £1.9m reflecting continued low natural gas price futures, together with rising offshore development costs. The reported loss from operations was therefore £2.1m (2012 - £2.6m), including dry hole costs of £0.5m (2012 - £nil).

Gibson Shipbrokers

Gibson Shipbrokers has continued to strengthen its shipbroking services during the first half of 2013. This has been achieved by the recruitment of a mix of experienced, younger and trainee brokers and support staff, mindful of the continuing weakness of the global shipping markets. Currently, the company employs 167 staff of which 23 are located in Singapore.

Oversupply of shipping capacity continues to impact global shipping markets and this situation is expected to last until 2015.

Principal Risks and Uncertainties Facing the Business

The Group has an established risk management, monitoring and review process. The process requires all businesses to identify, evaluate and monitor risks and take steps to reduce, eliminate or manage the risk.

There are a number of potential risks and uncertainties, which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results.

Some of the risks that Hunting is exposed to, which could have a material adverse impact on the Group, arise from the specific activities undertaken by the Group, whereas other risks are common to many international manufacturing companies.

Risks specific to the nature of the Group's businesses are: curtailment of shale drilling; raw material commodity prices; integration of acquisitions; capital investment programmes; relationships with key customers and product quality and reliability.

Other risks facing the business, which are common to other international manufacturing businesses, are: economics and geopolitics; loss of key executives; health, safety and environmental laws and regulations; effective control over subsidiaries and fluctuations in currency exchange rates.

The Directors do not consider that the principal risks and uncertainties have changed significantly since the publication of the Annual Report for the year ended 31 December 2012, in which these risks and uncertainties are discussed in detail on pages 27 and 28. As such these risks continue to apply to the Group for the remaining six months of the financial year.

Outlook

As we indicated in March 2013, first half trading reports a slow but solid set of results. Our expectation remains for an improving second half, provided market fundamentals remain on track and commodity prices remain at levels where operators can achieve meaningful returns.

Activity levels within our three core reporting divisions - Well Construction, Well Completion and Well Intervention will be driven by factors within the geographic regions where they operate:

North America

The onshore oil shale industry remains strong and activity levels in the offshore arena remain robust, where active deep water rigs now number 62. Hunting provides products and services to these markets across the North American continent and continues to invest in new facility square footage to provide further capacity and capability.

North America remains a key manufacturing hub for Hunting, generating over 65% of the Group's revenue. Hunting remains well positioned in this region to capture market share and participate in new technology developments for the global oil and gas industry.

UK and Europe

With an established OCTG presence in Europe, together with an ongoing sales push of the complete Hunting product portfolio into the European arena, including the Hunting Titan product range, the Group remains well positioned in this important market.

Middle East and Asia Pacific

Hunting remains active on a number of fronts within these regions from new sales initiatives to new business relationships. The domestic Chinese market remains a relatively small contributor to the results of Hunting today but the potential from the region remains significant. Efforts to capture market share will continue in this competitive environment. Elsewhere within these regions the opportunities for profitable growth are available and will be pursued.

Southern Africa

In the short term, and until our new regional facilities are established, we will continue to ship products into the sub-Sahara region and the contribution to Group results will be nominal. Start up costs will continue to be incurred, however in the longer term this we believe will be an important and material contributor to the results of Hunting.

Summary

Globally, energy demands continue to grow, with the industry faced with the ever increasing challenge of finding and developing new hydrocarbon reserves. These reserves are found in more complex environments, including higher pressures, higher temperatures, longer and/or deeper wellbores and, often, difficult operating geographies. Accordingly, energy companies continue to increase their operation budgets and seek the more innovative, product rich service companies to assist their exploration and production goals.

With the current portfolio of products, existing geographic footprint and expansion initiatives underway, the Board remains of the view that the Group is well positioned for profitable growth.

Forward-looking Statements

Certain statements in this half year report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

Richard Hunting, CBE Dennis Proctor

Chairman Chief Executive

29 August 2013

Statement of Directors' Responsibilities

The Directors confirm that, to the best of their knowledge, these condensed, consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union and that the half year management report includes a fair review of the information required by the Disclosure and Transparency Rules 4.2.7 and 4.2.8, namely:

· an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of consolidated financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related party transactions in the first six months of the financial year and any material changes in the related party transactions described in the 2012 Annual Report.

The Directors believe that the Interim Report taken as a whole is fair, balanced and understandable. In arriving at this conclusion the Board considered the opinion and recommendation of the audit committee who undertook the following work:

· review of early drafts of the Interim Report;

· regular review and discussion over the financial results during the period, including briefings by Group finance; and

· receipt and review of a report from the external auditors.

The Directors of the Company are listed on page 35 in Hunting PLC's 2012 Annual Report and on the Company's website: www.huntingplc.com. There have been no changes to the Directors since the Annual Report.

On behalf of the Board

Peter Rose

Finance Director

29 August 2013

Independent Review Report to Hunting PLC

Introduction

We have been engaged by the Company to review the condensed set of consolidated financial statements in the half year report for the six months ended 30 June 2013, which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Statement of Cash Flows and related notes. We have read the other information contained in the half year report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of consolidated financial statements.

Directors' Responsibilities

The half year report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half year report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of consolidated financial statements included in this half year report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of consolidated financial statements in the half year report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half year report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

PricewaterhouseCoopers LLP

Chartered Accountants

London

29 August 2013

Notes:

(a) The maintenance and integrity of the Hunting PLC website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the half year report since they were initially presented on the website.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

Condensed Consolidated Income Statement

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Balance Sheet

Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Statement of Cash Flows